How times change. Not so long ago the headlines were full of stories of property languishing unsold, homeowners upside down financially and millions of units of “shadow” inventory. However the front page of the Boston Globe this week end featured an article by Jennifer McKim titled: “Buyers are hungry, but homeowners holding on”. In the story Ms. Mckim notes that; “The number of homes for sale in Massachusetts is at an eight-year low, despite an increasing number of prospective buyers and a housing market that— overall— is on the mend.” The article further states: “Currently, there is a 4.7month supply of single-family homes for sale, according to the Massachusetts Association of Realtors. A balanced market has about 6 months worth of supply according to the Washington, D.C.-based, National Association of Realtors. Anything less tips the market in favor of sellers.” In Downtown Boston the situation is more acute with only 222 condominiums on the market to begin the year, consumption last year averaging 296 sales per month and accounting for the new listing inventory in completed new construction buildings like The W has been around a 1-1.5 months supply of inventory during Q1 2013.
What is the solution? Well, developers could build more units. Samuels & Associates was just awarded therights to develop Parcels 12 & 15 above the Massachusetts Turnpike at the intersection of Boylston Street and Massachusetts Avenue. This project is projected to bring 230 residences along with hotel and retail to the Back Bay. However, even under ideal conditions, it takes three years to complete a residential tower. Building above the turnpike offers additional complexities not found on a typical city lot so we cannot count on these units being added to the available inventory until sometime after Q1 2016. Currently there is only one, under construction building in the city with one half of those units sold and they will not be available to occupy until October of this year.
Given the current conditions expect continued upward pressure on pricing in Downtown Boston.
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